Hall Street Associates, LLC v. Mattel, Inc., 552 U.S. 576 (2008)

8/18/2019 Hall Street Associates, LLC v. Mattel, Inc., 552 U.S. 576 (2008)

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1(Slip Opinion) OCTOBER TERM, 2007

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as isbeing done in connection with this case, at the time the opinion is issued.The syllabus constitutes no part of the opinion of the Court but has beenprepared by the Reporter of Decisions for the convenience of the reader.See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

HALL STREET ASSOCIATES, L. L. C. v. MATTEL, INC.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

No. 06–989. Argued November 7, 2007—Decided March 25, 2008

The Federal Arbitration Act (FAA), 9 U. S. C. §§9–11, provides expe-

dited judicial review to confirm, vacate, or modify arbitration awards.

Under §9, a court “must” confirm an award “unless” it is vacated,

modified, or corrected “as prescribed” in §§10 and 11. Section 10 lists

grounds for vacating an award, including where the award was pro-

cured by “corruption,” “fraud,” or “undue means,” and where the arbi-

trators were “guilty of misconduct,” or “exceeded their powers.” Un-

der §11, the grounds for modifying or correcting an award include

“evident material miscalculation,” “evident material mistake,” and

“imperfect[ions] in [a] matter of form not affecting the merits.”

After a bench trial sustained respondent tenant’s (Mattel) right to

terminate its lease with petitioner landlord (Hall Street), the partiesproposed to arbitrate Hall Street’s claim for indemnification of the

costs of cleaning up the lease site. The District Court approved, and

entered as an order, the parties’ arbitration agreement, which, inter

alia, required the court to vacate, modify, or correct any award if the

arbitrator’s conclusions of law were erroneous. The arbitrator de-

cided for Mattel, but the District Court vacated the award for legal

error, expressly invoking the agreement’s legal-error review standard

and citing the Ninth Circuit’s LaPine decision for the proposition that

the FAA allows parties to draft a contract dictating an alternative re-

view standard. On remand, the arbitrator ruled for Hall Street, and

the District Court largely upheld the award, again applying the par-

ties’ stipulated review standard. The Ninth Circuit reversed, holding

the case controlled by its Kyocera decision, which had overruled LaP-

ine on the ground that arbitration-agreement terms fixing the modeof judicial review are unenforceable, given the exclusive grounds for

vacatur and modification provided by FAA §§10 and 11.


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2 HALL STREET ASSOCIATES, L.L.C. v. MATTEL, INC.

Syllabus

Held:

1. The FAA’s grounds for prompt vacatur and modification of

awards are exclusive for parties seeking expedited review under the

FAA. The Court rejects Hall Street’s two arguments to the contrary.

First, Hall Street submits that expandable judicial review has been

accepted as the law since Wilko v. Swan, 346 U. S. 427. Although a

Wilko statement—“the interpretations of the law by the arbitrators

in contrast to manifest disregard are not subject, in the federal

courts, to judicial review for error in interpretation,” id., at 436–437

(emphasis added)—arguably favors Hall Street’s position, arguable is

as far as it goes. Quite apart from the leap from a supposed judicial

expansion by interpretation to a private expansion by contract, Hall

Street overlooks the fact that the Wilko statement expressly rejects

just what Hall Street asks for here, general review for an arbitrator’slegal errors. Moreover, Wilko’s phrasing is too vague to support Hall

Street’s interpretation, since “manifest disregard” can be read as

merely referring to the §10 grounds collectively, rather than adding

to them, see, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U. S. 614, 656, or as shorthand for the §10 sub-

sections authorizing vacatur when arbitrators were “guilty of mis-

conduct” or “exceeded their powers.” Second, Hall Street says that

the agreement to review for legal error ought to prevail simply be-

cause arbitration is a creature of contract, and the FAA is motivated

by a congressional desire to enforce such agreements. Dean Witter

Reynolds Inc. v. Byrd, 470 U. S. 213, 220. This argument comes up

short because, although there may be a general policy favoring arbi-

tration, the FAA has textual features at odds with enforcing a con-

tract to expand judicial review once the arbitration is over. Even as-suming §§10 and 11 could be supplemented to some extent, it would

stretch basic interpretive principles to expand their uniformly narrow

stated grounds to the point of legal review generally. But §9 makes

evident that expanding §10’s and §11’s detailed categories at all

would rub too much against the grain: §9 carries no hint of flexibility

in unequivocally telling courts that they “must” confirm an arbitral

award, “unless” it is vacated or modified “as prescribed” by §§10 and

11. Instead of fighting the text, it makes more sense to see §§9–11 as

the substance of a national policy favoring arbitration with just the

limited review needed to maintain arbitration’s essential virtue of re-

solving disputes straightaway. Dean Witter, supra, at 217, 219, dis-

tinguished. Pp. 7–12.

2. In holding the §10 and §11 grounds exclusive with regard to en-

forcement under the FAA’s expedited judicial review mechanisms,

this Court decides nothing about other possible avenues for judicial

enforcement of awards. Accordingly, this case must be remanded for


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3Cite as: 552 U. S. ____ (2008)

Syllabus

consideration of independent issues. Because the arbitration agree-

ment was entered into during litigation, was submitted to the Dis-

trict Court as a request to deviate from the standard sequence of liti-

gation procedure, and was adopted by the court as an order, there is

some question whether it should be treated as an exercise of the Dis-

trict Court’s authority to manage its cases under Federal Rule of

Civil Procedure 16. This Court ordered supplemental briefing on the

issue, but the parties’ supplemental arguments implicate issues that

have not been considered previously in this litigation and could not

be well addressed for the first time here. Thus, the Court expresses

no opinion on these matters beyond leaving them open for Hall Street

to press on remand. Pp. 13–15.

196 Fed. Appx. 476, vacated and remanded.

SOUTER, J., delivered the opinion of the Court, in which ROBERTS,

C. J., and THOMAS, GINSBURG, and A LITO, JJ., joined, and in which

SCALIA , J., joined as to all but footnote 7. STEVENS, J., filed a dissenting

opinion, in which K ENNEDY , J., joined. BREYER, J., filed a dissenting

opinion.


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_________________

_________________

1Cite as: 552 U. S. ____ (2008)

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in thepreliminary print of the United States Reports. Readers are requested tonotify the Reporter of Decisions, Supreme Court of the United States, Wash-ington, D. C. 20543, of any typographical or other formal errors, in orderthat corrections may be made before the preliminary print goes to press.


No. 06–989

HALL STREET ASSOCIATES, L.L.C., PETITIONER v.

MATTEL, INC.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[March 25, 2008]

JUSTICE SOUTER delivered the opinion of the Court.*

The Federal Arbitration Act (FAA or Act), 9 U. S. C. §1

et seq., provides for expedited judicial review to confirm,

vacate, or modify arbitration awards. §§9–11 (2000 ed.

and Supp. V). The question here is whether statutory

grounds for prompt vacatur and modification may be

supplemented by contract. We hold that the statutory

grounds are exclusive.

I

This case began as a lease dispute between landlord,

petitioner Hall Street Associates, L. L. C., and tenant,

respondent Mattel, Inc. The property was used for many

years as a manufacturing site, and the leases provided

that the tenant would indemnify the landlord for any costs

resulting from the failure of the tenant or its predecessor

lessees to follow environmental laws while using the

premises. App. 88–89.

Tests of the property’s well water in 1998 showed high

levels of trichloroethylene (TCE), the apparent residue of

——————

* JUSTICE SCALIA joins all but footnote 7 of this opinion.


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manufacturing discharges by Mattel’s predecessors be-

tween 1951 and 1980. After the Oregon Department of

Environmental Quality (DEQ) discovered even more pol-

lutants, Mattel stopped drawing from the well and, along

with one of its predecessors, signed a consent order with

the DEQ providing for cleanup of the site.

After Mattel gave notice of intent to terminate the lease

in 2001, Hall Street filed this suit, contesting Mattel’s

right to vacate on the date it gave, and claiming that the

lease obliged Mattel to indemnify Hall Street for costs of

cleaning up the TCE, among other things. Following a

bench trial before the United States District Court for theDistrict of Oregon, Mattel won on the termination issue,

and after an unsuccessful try at mediating the indemnifi-

cation claim, the parties proposed to submit to arbitration.

The District Court was amenable, and the parties drew up

an arbitration agreement, which the court approved and

entered as an order. One paragraph of the agreement

provided that

“[t]he United States District Court for the District of

Oregon may enter judgment upon any award, either

by confirming the award or by vacating, modifying or

correcting the award. The Court shall vacate, modifyor correct any award: (i) where the arbitrator’s find-

ings of facts are not supported by substantial evi-

dence, or (ii) where the arbitrator’s conclusions of law

are erroneous.” App. to Pet. for Cert. 16a.

Arbitration took place, and the arbitrator decided for

Mattel. In particular, he held that no indemnification was

due, because the lease obligation to follow all applicable

federal, state, and local environmental laws did not re-

quire compliance with the testing requirements of the

Oregon Drinking Water Quality Act (Oregon Act); that Act

the arbitrator characterized as dealing with human healthas distinct from environmental contamination.


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3Cite as: 552 U. S. ____ (2008)


Hall Street then filed a District Court Motion for Order

Vacating, Modifying And/Or Correcting the arbitration

decision, App. 4, on the ground that failing to treat the

Oregon Act as an applicable environmental law under the

terms of the lease was legal error. The District Court

agreed, vacated the award, and remanded for further

consideration by the arbitrator. The court expressly in-

voked the standard of review chosen by the parties in the

arbitration agreement, which included review for legal

error, and cited LaPine Technology Corp. v. Kyocera Corp.,

130 F. 3d 884, 889 (CA9 1997), for the proposition that the

FAA leaves the parties “free . . . to draft a contract thatsets rules for arbitration and dictates an alternative stan-

dard of review.” App. to Pet. for Cert. 46a.

On remand, the arbitrator followed the District Court’s

ruling that the Oregon Act was an applicable environ-

mental law and amended the decision to favor Hall Street.

This time, each party sought modification, and again the

District Court applied the parties’ stipulated standard of

review for legal error, correcting the arbitrator’s calcula-

tion of interest but otherwise upholding the award. Each

party then appealed to the Court of Appeals for the Ninth

Circuit, where Mattel switched horses and contended thatthe Ninth Circuit’s recent en banc action overruling LaP-

ine in Kyocera Corp. v. Prudential-Bache Trade Servs.,

Inc., 341 F. 3d 987, 1000 (2003), left the arbitration

agreement’s provision for judicial review of legal error

unenforceable. Hall Street countered that Kyocera (the

later one) was distinguishable, and that the agreement’s

judicial review provision was not severable from the sub-

mission to arbitration.

The Ninth Circuit reversed in favor of Mattel in holding

that, “[u]nder Kyocera the terms of the arbitration agree-

ment controlling the mode of judicial review are unen-

forceable and severable.” 113 Fed. Appx. 272, 272–273(2004). The Circuit instructed the District Court on re-


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mand to

“return to the application to confirm the original arbi-

tration award (not the subsequent award revised after

reversal), and . . . confirm that award, unless . . . the

award should be vacated on the grounds allowable

under 9 U. S. C. §10, or modified or corrected under

the grounds allowable under 9 U. S. C. §11.” Id., at

273.

After the District Court again held for Hall Street and the

Ninth Circuit again reversed,1 we granted certiorari to

decide whether the grounds for vacatur and modificationprovided by §§10 and 11 of the FAA are exclusive. 550

U. S. __ (2007). We agree with the Ninth Circuit that they

are, but vacate and remand for consideration of independ-

ent issues.

II

Congress enacted the FAA to replace judicial indisposi-

tion to arbitration with a “national policy favoring [it] and

plac[ing] arbitration agreements on equal footing with all

other contracts.” Buckeye Check Cashing, Inc. v.

Cardegna, 546 U. S. 440, 443 (2006). As for jurisdiction

over controversies touching arbitration, the Act does noth-ing, being “something of an anomaly in the field of federal-

court jurisdiction” in bestowing no federal jurisdiction but

rather requiring an independent jurisdictional basis.

Moses H. Cone Memorial Hospital v. Mercury Constr.

Corp., 460 U. S. 1, 25, n. 32 (1983); see, e.g., 9 U. S. C. §4

(providing for action by a federal district court “which,

——————

1 On remand, the District Court vacated the arbitration award, be-

cause it supposedly rested on an implausible interpretation of the lease

and thus exceeded the arbitrator’s powers, in violation of 9 U. S. C. §10.

Mattel appealed, and the Ninth Circuit reversed, holding that implau-sibility is not a valid ground for vacating or correcting an award under

§10 or §11. 196 Fed. Appx. 476, 477–478 (2006).


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5Cite as: 552 U. S. ____ (2008)


save for such [arbitration] agreement, would have jurisdic-

tion under title 28”).2 But in cases falling within a court’s

jurisdiction, the Act makes contracts to arbitrate “valid,

irrevocable, and enforceable,” so long as their subject

involves “commerce.” §2. And this is so whether an

agreement has a broad reach or goes just to one dispute,

and whether enforcement be sought in state court or

federal. See ibid.; Southland Corp. v. Keating , 465 U. S. 1,

15–16 (1984).

The Act also supplies mechanisms for enforcing arbitra-

tion awards: a judicial decree confirming an award, an

order vacating it, or an order modifying or correcting it.§§9–11. An application for any of these orders will get

streamlined treatment as a motion, obviating the separate

contract action that would usually be necessary to enforce

or tinker with an arbitral award in court.3 §6. Under the

terms of §9, a court “must” confirm an arbitration award

“unless” it is vacated, modified, or corrected “as pre-

scribed” in §§10 and 11. Section 10 lists grounds for vacat-

ing an award, while §11 names those for modifying or

correcting one.4

——————

2 Because the FAA is not jurisdictional, there is no merit in the argu-ment that enforcing the arbitration agreement’s judicial review provi-

sion would create federal jurisdiction by private contract. The issue is

entirely about the scope of judicial review permissible under the FAA.3 Unlike JUSTICE STEVENS, see post, at 2 (dissenting opinion), we un-

derstand this expedited review to be what each of the parties under-

stood it was seeking from time to time; neither party’s pleadings were

amended to raise an independent state-law contract claim or defense

specific to the arbitration agreement.4 Title 9 U. S. C. §10(a) (2000 ed., Supp. V) provides:

“(a) In any of the following cases the United States court in and for

the district wherein the award was made may make an order vacating

the award upon the application of any party to the arbitration—

“(1) where the award was procured by corruption, fraud, or undue

means;“(2) where there was evident partiality or corruption in the arbitra-

tors, or either of them;


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The Courts of Appeals have split over the exclusiveness

of these statutory grounds when parties take the FAA

shortcut to confirm, vacate, or modify an award, with some

saying the recitations are exclusive, and others regarding

them as mere threshold provisions open to expansion by

agreement.5 As mentioned already, when this litigation

——————

“(3) where the arbitrators were guilty of misconduct in refusing to

postpone the hearing, upon sufficient cause shown, or in refusing to

hear evidence pertinent and material to the controversy; or of any other

misbehavior by which the rights of any party have been prejudiced; or

“(4) where the arbitrators exceeded their powers, or so imperfectly

executed them that a mutual, final, and definite award upon the

subject matter submitted was not made.”

Title 9 U. S. C. §11 (2000 ed.) provides:

“In either of the following cases the United States court in and for the

district wherein the award was made may make an order modifying or

correcting the award upon the application of any party to the arbitra-

tion—

“(a) Where there was an evident material miscalculation of figures or

an evident material mistake in the description of any person, thing, or

property referred to in the award.

“(b) Where the arbitrators have awarded upon a matter not submit-

ted to them, unless it is a matter not affecting the merits of the decision

upon the matter submitted.

“(c) Where the award is imperfect in matter of form not affecting the

merits of the controversy.

“The order may modify and correct the award, so as to effect the

intent thereof and promote justice between the parties.”5 The Ninth and Tenth Circuits have held that parties may not con-

tract for expanded judicial review. See Kyocera Corp. v. Prudential- Bache Trade Servs., Inc., 341 F. 3d 987, 1000 (CA9 2003); Bowen v. Amoco Pipeline Co., 254 F. 3d 925, 936 (CA10 2001). The First, Third,Fifth, and Sixth Circuits, meanwhile, have held that parties may socontract. See Puerto Rico Tel. Co. v. U. S. Phone Mfg. Corp., 427 F. 3d21, 31 (CA1 2005); Jacada (Europe), Ltd. v. International MarketingStrategies, Inc., 401 F. 3d 701, 710 (CA6 2005); Roadway PackageSystem, Inc. v. Kayser, 257 F. 3d 287, 288 (CA3 2001); Gateway Tech-nologies, Inc. v. MCI Telecommunications Corp., 64 F. 3d 993, 997 (CA51995). The Fourth Circuit has taken the latter side of the split in an

unpublished opinion, see Syncor Int’l Corp. v. McLeland, 120 F. 3d 262(1997), while the Eighth Circuit has expressed agreement with theformer side in dicta, see UHC Management Co. v. Computer Sciences


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7Cite as: 552 U. S. ____ (2008)


started, the Ninth Circuit was on the threshold side of the

split, see LaPine, 130 F. 3d, at 889, from which it later

departed en banc in favor of the exclusivity view, see

Kyocera, 341 F. 3d, at 1000, which it followed in this case,

see 113 Fed. Appx., at 273. We now hold that §§10 and 11

respectively provide the FAA’s exclusive grounds for expe-

dited vacatur and modification.

III

Hall Street makes two main efforts to show that the

grounds set out for vacating or modifying an award are not

exclusive, taking the position, first, that expandable judi-cial review authority has been accepted as the law since

Wilko v. Swan, 346 U. S. 427 (1953). This, however, was

not what Wilko decided, which was that §14 of the Securi-

ties Act of 1933 voided any agreement to arbitrate claims

of violations of that Act, see id., at 437–438, a holding

since overruled by Rodriguez de Quijas v. Shear-

son/American Express, Inc., 490 U. S. 477, 484 (1989).

Although it is true that the Court’s discussion includes

some language arguably favoring Hall Street’s position,

arguable is as far as it goes.

The Wilko Court was explaining that arbitration would

undercut the Securities Act’s buyer protections when it

remarked (citing FAA §10) that “[p]ower to vacate an

[arbitration] award is limited,” 346 U. S., at 436, and went

on to say that “the interpretations of the law by the arbi-

trators in contrast to manifest disregard [of the law] are

not subject, in the federal courts, to judicial review for

error in interpretation,” id., at 436–437. Hall Street reads

this statement as recognizing “manifest disregard of the

law” as a further ground for vacatur on top of those listed

in §10, and some Circuits have read it the same way. See,

e.g., McCarthy v. Citigroup Global Markets, Inc., 463 F. 3d

——————

Corp., 148 F. 3d 992, 997–998 (1998).


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87, 91 (CA1 2006); Hoeft v. MVL Group, Inc., 343 F. 3d 57,

64 (CA2 2003); Prestige Ford v. Ford Dealer Computer

Servs., Inc., 324 F. 3d 391, 395–396 (CA5 2003); Scott v.

Prudential Securities, Inc., 141 F. 3d 1007, 1017 (CA11

1998). Hall Street sees this supposed addition to §10 as

the camel’s nose: if judges can add grounds to vacate (or

modify), so can contracting parties.

But this is too much for Wilko to bear. Quite apart from

its leap from a supposed judicial expansion by interpreta-

tion to a private expansion by contract, Hall Street over-

looks the fact that the statement it relies on expressly

rejects just what Hall Street asks for here, general reviewfor an arbitrator’s legal errors. Then there is the vague-

ness of Wilko’s phrasing. Maybe the term “manifest disre-

gard” was meant to name a new ground for review, but

maybe it merely referred to the §10 grounds collectively,

rather than adding to them. See, e.g., Mitsubishi Motors

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 656

(1985) (STEVENS, J., dissenting) (“Arbitration awards are

only reviewable for manifest disregard of the law, 9

U. S. C. §§10, 207”); I/S Stavborg v. National Metal Con-

verters, Inc., 500 F. 2d 424, 431 (CA2 1974). Or, as some

courts have thought, “manifest disregard” may have beenshorthand for §10(a)(3) or §10(a)(4), the subsections au-

thorizing vacatur when the arbitrators were “guilty of

misconduct” or “exceeded their powers.” See, e.g., Kyocera,

supra, at 997. We, when speaking as a Court, have merely

taken the Wilko language as we found it, without embel-

lishment, see First Options of Chicago, Inc. v. Kaplan, 514

U. S. 938, 942 (1995), and now that its meaning is impli-

cated, we see no reason to accord it the significance that

Hall Street urges.

Second, Hall Street says that the agreement to review

for legal error ought to prevail simply because arbitration

is a creature of contract, and the FAA is “motivated, firstand foremost, by a congressional desire to enforce agree-


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9Cite as: 552 U. S. ____ (2008)


ments into which parties ha[ve] entered.” Dean Witter

Reynolds Inc. v. Byrd, 470 U. S. 213, 220 (1985). But,

again, we think the argument comes up short. Hall Street

is certainly right that the FAA lets parties tailor some,

even many features of arbitration by contract, including

the way arbitrators are chosen, what their qualifications

should be, which issues are arbitrable, along with proce-

dure and choice of substantive law. But to rest this case

on the general policy of treating arbitration agreements as

enforceable as such would be to beg the question, which is

whether the FAA has textual features at odds with enforc-

ing a contract to expand judicial review following thearbitration.

To that particular question we think the answer is yes,

that the text compels a reading of the §§10 and 11 catego-ries as exclusive. To begin with, even if we assumed §§10and 11 could be supplemented to some extent, it would

stretch basic interpretive principles to expand the statedgrounds to the point of evidentiary and legal review gen-erally. Sections 10 and 11, after all, address egregious

departures from the parties’ agreed-upon arbitration:“corruption,” “fraud,” “evident partiality,” “misconduct,”“misbehavior,” “exceed[ing]. . . powers,” “evident material

miscalculation,” “evident material mistake,” “award[s]upon a matter not submitted;” the only ground with anysofter focus is “imperfect[ions],” and a court may correct

those only if they go to “[a] matter of form not affecting themerits.” Given this emphasis on extreme arbitral conduct,the old rule of ejusdem generis has an implicit lesson to

teach here. Under that rule, when a statute sets out aseries of specific items ending with a general term, thatgeneral term is confined to covering subjects comparable

to the specifics it follows. Since a general term included inthe text is normally so limited, then surely a statute withno textual hook for expansion cannot authorize contract-

ing parties to supplement review for specific instances ofoutrageous conduct with review for just any legal error.


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“Fraud” and a mistake of law are not cut from the samecloth.

That aside, expanding the detailed categories would rub

too much against the grain of the §9 language, where

provision for judicial confirmation carries no hint of flexi-

bility. On application for an order confirming the arbitra-

tion award, the court “must grant” the order “unless the

award is vacated, modified, or corrected as prescribed in

sections 10 and 11 of this title.” There is nothing malle-

able about “must grant,” which unequivocally tells courts

to grant confirmation in all cases, except when one of the

“prescribed” exceptions applies. This does not soundremotely like a provision meant to tell a court what to do

just in case the parties say nothing else.6

In fact, anyone who thinks Congress might have under-

stood §9 as a default provision should turn back to §5 for

an example of what Congress thought a default provision

——————

6 Hall Street claims that §9 supports its position, because it allows a

court to confirm an award only “[i]f the parties in their agreement have

agreed that a judgment of the court shall be entered upon the award

made pursuant to the arbitration.” Hall Street argues that this lan-

guage “expresses Congress’s intent that a court must enforce the

agreement of the parties as to whether, and under what circumstances,a judgment shall be entered.” Reply Brief for Petitioner 5; see also

Brief for Petitioner 22–24. It is a peculiar argument, converting

agreement as a necessary condition for judicial enforcement into a

sufficient condition for a court to bar enforcement. And the text is

otherwise problematical for Hall Street: §9 says that if the parties have

agreed to judicial enforcement, the court “must grant” confirmation

unless grounds for vacatur or modification exist under §10 or §11. The

sentence nowhere predicates the court’s judicial action on the parties’

having agreed to specific standards; if anything, it suggests that, so

long as the parties contemplated judicial enforcement, the court must

undertake such enforcement under the statutory criteria. In any case,

the arbitration agreement here did not specifically predicate entry of

judgment on adherence to its judicial-review standard. See App. to Pet.

for Cert. 15a. To the extent Hall Street argues otherwise, it contestsnot the meaning of the FAA but the Ninth Circuit’s severability analy-

sis, upon which it did not seek certiorari.


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11Cite as: 552 U. S. ____ (2008)


would look like:

“[i]f in the agreement provision be made for a method

of naming or appointing an arbitrator. . . such method

shall be followed; but if no method be provided

therein, or if a method be provided and any party

thereto shall fail to avail himself of such method, . . .

then upon the application of either party to the

controversy the court shall designate and appoint an

arbitrator. . . .”

“[I]f no method be provided” is a far cry from “must grant

. . . unless” in §9.Instead of fighting the text, it makes more sense to see

the three provisions, §§9–11, as substantiating a national

policy favoring arbitration with just the limited review

needed to maintain arbitration’s essential virtue of resolv-

ing disputes straightaway. Any other reading opens the

door to the full-bore legal and evidentiary appeals that can

“rende[r] informal arbitration merely a prelude to a more

cumbersome and time-consuming judicial review process,”

Kyocera, 341 F. 3d, at 998; cf. Ethyl Corp. v. United Steel-

workers of America, 768 F. 2d 180, 184 (CA7 1985),

and bring arbitration theory to grief in post-arbitration

process.

Nor is Dean Witter, 470 U. S. 213, to the contrary, as

Hall Street claims it to be. Dean Witter held that state-

law claims subject to an agreement to arbitrate could not

be remitted to a district court considering a related, non-

arbitrable federal claim; the state-law claims were to go to

arbitration immediately. Id., at 217. Despite the opinion’s

language “reject[ing] the suggestion that the overriding

goal of the [FAA] was to promote the expeditious resolu-

tion of claims,” id., at 219, the holding mandated immedi-

ate enforcement of an arbitration agreement; the Court

was merely trying to explain that the inefficiency anddifficulty of conducting simultaneous arbitration and


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federal-court litigation was not a good enough reason to

defer the arbitration, see id., at 217.

When all these arguments based on prior legal authority

are done with, Hall Street and Mattel remain at odds over

what happens next. Hall Street and its amici say parties

will flee from arbitration if expanded review is not open to

them. See, e.g., Brief for Petitioner 39; Brief for New

England Legal Foundation et al. as Amici Curiae 15. One

of Mattel’s amici foresees flight from the courts if it is.

See Brief for U. S. Council for Int’l Business as Amicus

Curiae 29–30. We do not know who, if anyone, is right,

and so cannot say whether the exclusivity reading of thestatute is more of a threat to the popularity of arbitrators

or to that of courts. But whatever the consequences of our

holding, the statutory text gives us no business to expand

the statutory grounds.7

——————

7 The history of the FAA is consistent with our conclusion. The text of

the FAA was based upon that of New York’s arbitration statute. See

S. Rep. No. 536, 68th Cong., 1st Sess., 3 (1924) (“The bill . . . follows the

lines of the New York arbitration law enacted in 1920 . . .”). The New

York Arbitration Law incorporated pre-existing provisions of the New

York Code of Civil Procedure. See 1920 N. Y. Laws p. 806. Section

2373 of the code said that, upon application by a party for a confirma-tion order, “the court must grant such an order, unless the award is

vacated, modified, or corrected, as prescribed by the next two sections.”

2 N. Y. Ann. Code Civ. Proc. (Stover 6th ed. 1902) (hereinafter Stover).

The subsequent sections gave grounds for vacatur and modification or

correction virtually identical to the 9 U. S. C. §§10 and 11 grounds. See

2 Stover §§2374, 2375.

In a brief submitted to the House and Senate Subcommittees of the

Committees on the Judiciary, Julius Henry Cohen, one of the primary

drafters of both the 1920 New York Act and the proposed FAA, said,

“The grounds for vacating, modifying, or correcting an award are

limited. If the award [meets a condition of §10], then and then only the

award may be vacated. . . . If there was [an error under §11], then and

then only it may be modified or corrected . . . .” Arbitration of Inter-

state Commercial Disputes, Joint Hearings before the Subcommitteesof the Committees on the Judiciary on S. 1005 and H. R. 646, 68th

Cong., 1st Sess., 34 (1924). The House Report similarly recognized that


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13Cite as: 552 U. S. ____ (2008)


IV

In holding that §§10 and 11 provide exclusive regimes

for the review provided by the statute, we do not purport

to say that they exclude more searching review based on

authority outside the statute as well. The FAA is not the

only way into court for parties wanting review of arbitra-

tion awards: they may contemplate enforcement under

state statutory or common law, for example, where judicial

review of different scope is arguable. But here we speak

only to the scope of the expeditious judicial review under

§§9, 10, and 11, deciding nothing about other possible

avenues for judicial enforcement of arbitration awards.

Although one such avenue is now claimed to be revealed

in the procedural history of this case, no claim to it was

presented when the case arrived on our doorstep, and no

reason then appeared to us for treating this as anything

but an FAA case. There was never any question about

meeting the FAA §2 requirement that the leases from

which the dispute arose be contracts “involving com-

merce.” 9 U. S. C. §2; see Allied-Bruce Terminix Cos. v.

Dobson, 513 U. S. 265, 277 (1995) (§2 “exercise[s] Con-

gress’ commerce power to the full”). Nor is there any

doubt now that the parties at least had the FAA in mindat the outset; the arbitration agreement even incorporates

FAA §7, empowering arbitrators to compel attendance of

——————

an “award may . . . be entered as a judgment, subject to attack by the

other party for fraud and corruption and similar undue influence, or for

palpable error in form.” H. R. Rep. No. 96, 68th Cong., 1st Sess., 2

(1924).

In a contemporaneous campaign for the promulgation of a uniform

state arbitration law, Cohen contrasted the New York Act with the

Illinois Arbitration and Awards Act of 1917, which required an arbitra-

tor, at the request of either party, to submit any question of law arising

during arbitration to judicial determination. See Handbook of theNational Conference of Commissioners on Uniform State Laws and

Proceedings 97–98 (1924); 1917 Ill. Laws p. 203.


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witnesses. App. to Pet. for Cert. 13a.

While it is true that the agreement does not expressly

invoke FAA §9, §10, or §11, and none of the various mo-

tions to vacate or modify the award expressly said that the

parties were relying on the FAA, the District Court appar-

ently thought it was applying the FAA when it alluded to

the Act in quoting LaPine, 130 F. 3d, at 889, for the then-

unexceptional proposition that “ ‘[f]ederal courts can ex-

pand their review of an arbitration award beyond the

FAA’s grounds, when . . . the parties have so agreed.’ ”

App. to Pet. for Cert. 46a. And the Ninth Circuit, for its

part, seemed to take it as a given that the District Court’sdirect and prompt examination of the award depended on

the FAA; it found the expanded-review provision unen-

forceable under Kyocera and remanded for confirmation of

the original award “unless the district court determines

that the award should be vacated on the grounds allow-

able under 9 U. S. C. §10, or modified or corrected under

the grounds allowable under 9 U. S. C. §11.” 113 Fed.

Appx., at 273. In the petition for certiorari and the princi-

pal briefing before us, the parties acted on the same prem-

ise. See, e.g., Pet. for Cert. 27 (“This Court should accept

review to resolve this important issue of statutory con-struction under the FAA”); Brief for Petitioner 16 (“Be-

cause arbitration provisions providing for judicial review

of arbitration awards for legal error are consistent with

the goals and policies of the FAA and employ a standard of

review which district courts regularly apply in a variety of

contexts, those provisions are entitled to enforcement

under the FAA”).

One unusual feature, however, prompted some of us to

question whether the case should be approached another

way. The arbitration agreement was entered into in the

course of district-court litigation, was submitted to the

District Court as a request to deviate from the standardsequence of trial procedure, and was adopted by the Dis-


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15Cite as: 552 U. S. ____ (2008)


trict Court as an order. See App. 46–47; App. to Pet. for

Cert. 4a–8a. Hence a question raised by this Court at oral

argument: should the agreement be treated as an exercise

of the District Court’s authority to manage its cases under

Federal Rules of Civil Procedure 16? See, e.g., Tr. of Oral

Arg. 11–12. Supplemental briefing at the Court’s behest

joined issue on the question, and it appears that Hall

Street suggested something along these lines in the Court

of Appeals, which did not address the suggestion.

We are, however, in no position to address the question

now, beyond noting the claim of relevant case manage-

ment authority independent of the FAA. The parties’supplemental arguments on the subject in this Court

implicate issues of waiver and the relation of the FAA both

to Rule 16 and the Alternative Dispute Resolution Act of

1998, 28 U. S. C. §651 et seq., none of which has been

considered previously in this litigation, or could be well

addressed for the first time here. We express no opinion

on these matters beyond leaving them open for Hall Street

to press on remand. If the Court of Appeals finds they are

open, the court may consider whether the District Court’s

authority to manage litigation independently warranted

that court’s order on the mode of resolving the indemnifi-cation issues remaining in this case.

* * *

Although we agree with the Ninth Circuit that the FAA

confines its expedited judicial review to the grounds listed

in 9 U. S. C. §§10 and 11, we vacate the judgment and

remand the case for proceedings consistent with this

opinion.

It is so ordered.


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_________________

_________________

1Cite as: 552 U. S. ____ (2008)

STEVENS, J., dissenting


No. 06–989


MATTEL, INC.



[March 25, 2008]

JUSTICE STEVENS, with whom JUSTICE K ENNEDY joins,dissenting.

May parties to an ongoing lawsuit agree to submit their

dispute to arbitration subject to the caveat that the trial

judge should refuse to enforce an award that rests on an

erroneous conclusion of law? Prior to Congress’ enactment

of the Federal Arbitration Act (FAA or Act) in 1925, the

answer to that question would surely have been “Yes.”1

Today, however, the Court holds that the FAA does not

merely authorize the vacation or enforcement of awards on

specified grounds, but also forbids enforcement of perfectly

reasonable judicial review provisions in arbitration

agreements fairly negotiated by the parties and approved

by the district court. Because this result conflicts with the

primary purpose of the FAA and ignores the historical

context in which the Act was passed, I respectfully

dissent.

Prior to the passage of the FAA, American courts were

generally hostile to arbitration. They refused, with rare

exceptions, to order specific enforcement of executory

——————

1 See Klein v. Catara, 14 F. Cas. 732, 735 (C. C.D. Mass. 1814) (“If the

parties wish to reserve the law for the decision of the court, they maystipulate to that effect in the submission; they may restrain or enlarge

its operation as they please”) (Story, J.).


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agreements to arbitrate.2 Section 2 of the FAA responded

to this hostility by making written arbitration agreements

“valid, irrevocable, and enforceable.” 9 U. S. C. §2. This

section, which is the centerpiece of the FAA, reflects Con-

gress’ main goal in passing the legislation: “to abrogate

the general common-law rule against specific enforcement

of arbitration agreements,” Southland Corp. v. Keating ,

465 U. S. 1, 18 (1984) (STEVENS, J., concurring in part and

dissenting in part), and to “ensur[e] that private arbitra-

tion agreements are enforced according to their terms,”

Volt Information Sciences, Inc. v. Board of Trustees of

Leland Stanford Junior Univ., 489 U. S. 468, 478 (1989).Given this settled understanding of the core purpose of the

FAA, the interests favoring enforceability of parties’ arbi-

tration agreements are stronger today than before the

FAA was enacted. As such, there is more—and certainly

not less—reason to give effect to parties’ fairly negotiated

decisions to provide for judicial review of arbitration

awards for errors of law.

Petitioner filed this rather complex action in an Oregon

state court. Based on the diverse citizenship of the par-

ties, respondent removed the case to federal court. More

than three years later, and after some issues had beenresolved, the parties sought and obtained the District

Court’s approval of their agreement to arbitrate the re-

maining issues subject to de novo judicial review. They

neither requested, nor suggested that the FAA authorized,

any “expedited” disposition of their case. Because the

arbitrator made a rather glaring error of law, the judge

refused to affirm his award until after that error was

corrected. The Ninth Circuit reversed.

——————

2 See Red Cross Line v. Atlantic Fruit Co., 264 U. S. 109, 120–122

(1924); The Atlanten, 252 U. S. 313, 315–316 (1920). Although agree-ments to arbitrate were not specifically enforceable, courts did award

nominal damages for the breach of such contracts.


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3Cite as: 552 U. S. ____ (2008)


This Court now agrees with the Ninth Circuit’s (most

recent) interpretation of the FAA as setting forth the

exclusive grounds for modification or vacation of an arbi-

tration award under the statute. As I read the Court’s

opinion, it identifies two possible reasons for reaching this

result: (1) a supposed quid pro quo bargain between Con-

gress and litigants that conditions expedited federal en-

forcement of arbitration awards on acceptance of a statu-

tory limit on the scope of judicial review of such awards;

and (2) an assumption that Congress intended to include

the words “and no other” in the grounds specified in §§10

and 11 for the vacatur and modification of awards. Nei-ther reason is persuasive.

While §9 of the FAA imposes a 1-year limit on the time

in which any party to an arbitration may apply for confir-

mation of an award, the statute does not require that the

application be given expedited treatment. Of course, the

premise of the entire statute is an assumption that the

arbitration process may be more expeditious and less

costly than ordinary litigation, but that is a reason for

interpreting the statute liberally to favor the parties’ use

of arbitration. An unnecessary refusal to enforce a per-

fectly reasonable category of arbitration agreements de-feats the primary purpose of the statute.

That purpose also provides a sufficient response to the

Court’s reliance on statutory text. It is true that a wooden

application of “the old rule of ejusdem generis,” ante, at 9,

might support an inference that the categories listed in

§§10 and 11 are exclusive, but the literal text does not

compel that reading—a reading that is flatly inconsistent

with the overriding interest in effectuating the clearly

expressed intent of the contracting parties. A listing of

grounds that must always be available to contracting

parties simply does not speak to the question whether

they may agree to additional grounds for judicial review.Moreover, in light of the historical context and the


22/24



broader purpose of the FAA, §§10 and 11 are best under-

stood as a shield meant to protect parties from hostile

courts, not a sword with which to cut down parties’ “valid,

irrevocable and enforceable” agreements to arbitrate their

disputes subject to judicial review for errors of law.3 §2.

Even if I thought the narrow issue presented in this

case were as debatable as the conflict among the courts of

appeals suggests, I would rely on a presumption of over-

riding importance to resolve the debate and rule in favor

of petitioner’s position that the FAA permits the statutory

grounds for vacatur and modification of an award to be

supplemented by contract. A decision “not to regulate” theterms of an agreement that does not even arguably offend

any public policy whatsoever, “is adequately justified by a

presumption in favor of freedom.” FCC v. Beach Commu-

nications, Inc., 508 U. S. 307, 320 (1993) (STEVENS, J.,

concurring in judgment).

Accordingly, while I agree that the judgment of the

Court of Appeals must be set aside, and that there may be

additional avenues available for judicial enforcement of

parties’ fairly negotiated review provisions, see, ante, at

13–15, I respectfully dissent from the Court’s interpreta-

tion of the FAA, and would direct the Court of Appeals toaffirm the judgment of the District Court enforcing the

arbitrator’s final award.

——————

3 In the years before the passage of the FAA, arbitration awards were

subject to thorough and broad judicial review. See Cohen & Dayton,

The New Federal Arbitration Law, 12 Va. L. Rev. 265, 270-271 (1926);

Cullinan, Contracting for an Expanded Scope of Judicial Review in

Arbitration Agreements, 51 Vand. L. Rev. 395, 409 (1998). In §§10 and

11 of the FAA, Congress significantly limited the grounds for judicialvacatur or modification of such awards in order to protect arbitration

awards from hostile and meddlesome courts.


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_________________

_________________

1Cite as: 552 U. S. ____ (2008)

BREYER, J., dissenting


No. 06–989


MATTEL, INC.



[March 25, 2008]

JUSTICE BREYER, dissenting.The question presented in this case is whether “the

Federal Arbitration Act . . . precludes a federal court from

enforcing” an arbitration agreement that gives the court

the power to set aside an arbitration award that embodies

an arbitrator’s mistake about the law. Pet. for Cert. i.

Like the majority and JUSTICE STEVENS, and primarily for

the reasons they set forth, I believe that the Act does not

preclude enforcement of such an agreement. See ante, at

13 (opinion of the Court) (The Act “is not the only way into

court for parties wanting review of arbitration awards”);

ante, at 3–4 (STEVENS, J., dissenting) (The Act is a “shield

meant to protect parties from hostile courts, not a sword

with which to cut down parties’ ‘valid, irrevocable and

enforceable’ agreements to arbitrate their disputes subject

to judicial review for errors of law”).

At the same time, I see no need to send the case back for

further judicial decisionmaking. The agreement here was

entered into with the consent of the parties and the ap-

proval of the District Court. Aside from the Federal Arbi-

tration Act itself, 9 U. S. C. §1 et seq., respondent below

pointed to no statute, rule, or other relevant public policy

that the agreement might violate. The Court has now

rejected its argument that the agreement violates the Act,and I would simply remand the case with instructions that


24/24


BREYER, J., dissenting

the Court of Appeals affirm the District Court’s judgment

enforcing the arbitrator’s final award.

Documents

Hall Street Associates, LLC v. Mattel, Inc., 552 U.S. 576 (2008)